SUMMARY: Section 2 of the Depository Institutions Disaster Relief Act
of 1992 (DIDRA) authorizes the Agencies to make exceptions to statutory
and regulatory requirements relating to appraisals for certain
transactions. The exceptions are available for transactions that
involve real property in major disaster areas when the exceptions would
facilitate recovery from the disaster and would be consistent with
safety and soundness. In this notice, the Agencies grant exceptions for
certain real estate-related transactions in areas affected by
Hurricanes Katrina and Rita. The expiration dates for the exceptions
are set out in the SUPPLEMENTARY INFORMATION section.

DATES: This order is effective on October 14, 2005 and expires for
specific areas on the dates indicated in the SUPPLEMENTARY INFORMATION
section.

Section 2 of DIDRA, 12 U.S.C. 3352, authorizes the Agencies
to make
exceptions to statutory and regulatory appraisal requirements for
certain transactions. These exceptions are available for real property
located in areas that the President has determined, pursuant to 42
U.S.C. 5170, that a major disaster exists, provided that the exception
would facilitate recovery from the major disaster and is consistent
with safety and soundness.\1\ Such exceptions expire not later than
three years after the date of the President's determination that a
major disaster exists in the area.
---------------------------------------------------------------------------

\1\ The agencies must make the exception no later than 30
months
after the date on which the President determines that a major
disaster exists in the area.
---------------------------------------------------------------------------

On August 29, and September 24, 2005, the President declared
several areas in certain Alabama, Mississippi, and Texas counties and
Louisiana parishes as Major Disaster Areas and individual assistance
was authorized by the Federal Emergency Management Agency (``FEMA'') as
a result of the extensive damage caused by Hurricanes Katrina and Rita.
The Agencies believe that granting relief from the appraisal
requirements for real estate transactions in certain designated
disaster areas is consistent with the provisions of DIDRA.\2\
---------------------------------------------------------------------------

\2\ Those counties and parishes designated by FEMA as
receiving
``Individual and Public Assistance (all categories)'' and
``Individual and Public Assistance (Categories A and B).''
---------------------------------------------------------------------------

The Agencies have determined that the disruption of real
estate
markets in those FEMA-designated disaster areas interferes with the
ability of depository institutions to obtain appraisals that comply
with statutory and regulatory requirements. Therefore, the Agencies
have determined that the disruption may impede institutions in making
loans and engaging in other transactions that would aid in the
reconstruction and rehabilitation of the affected areas. Accordingly,
the Agencies have determined that recovery from these two major
disasters would be facilitated by excepting certain transactions
involving real estate located in the areas directly affected by the
hurricanes from the real estate appraisal requirements of Title XI of
the Financial Institutions Reform, Recovery, and Enforcement Act of
1989 (FIRREA), as amended, and the regulations promulgated thereunder.

[[Page 59988]]

This order has the effect of excepting the transactions specified below
from the definition of ``federally related transactions'' in Title XI
of FIRREA and the agencies' appraisal regulations, and thereby from the
statutory and regulatory real estate appraisal requirements for such
transactions.
The Agencies also have determined that the exceptions are
consistent with safety and soundness, subject to the requirement that
the depository institution's records relating to any excepted
transaction appropriately document the following: (1) The property
involved was directly affected by the major disaster or the transaction
would facilitate recovery from the disaster; (2) there is a binding
commitment to fund the transaction that is made within three years
after the date the major disaster was declared; and (3) the value of
the real property supports the institution's decision to enter into the
transaction. In addition, the transaction must continue to be subject
to review by management and by the Agencies in the course of
examinations of the institution.

Expiration Dates

Exceptions provided under this order expire not later than
three
years after the date on which the President determines, pursuant to
section 401 of the Robert T. Stafford Disaster Relief and Emergency
Assistance Act, 42 U.S.C. 5170 (DREAA), that a major disaster exists in
the area. Accordingly, exceptions for the major disasters declared due
to Hurricane Katrina expire on August 29, 2008, in Alabama, Mississippi
and Louisiana; and exceptions for the major disasters declared due to
Hurricane Rita expire on September 24, 2008, in Louisiana and Texas.

Order

In accordance with section 2 of DIDRA, relief is hereby
granted
from the provisions of Title XI of FIRREA and the agencies' appraisal
regulations for any real estate-related financial transaction that
requires the services of an appraiser under those provisions, provided
that:
(1) The transaction involves real property located in an area
that
the President has determined, pursuant to section 401 of DREAA, is a
major disaster area as a result of Hurricane Katrina (August 2005) in
Alabama, Louisiana, and Mississippi; or as a result of Hurricane Rita
(September 2005) in Louisiana and Texas, and has been designated
eligible for federal assistance by FEMA; \3\
---------------------------------------------------------------------------

\3\ Those areas designated by FEMA as receiving ``Individual
and
Public Assistance (all categories)'' and ``Individual and Public
Assistance (Categories A and B)'' in Alabama, Mississippi, and Texas
counties and Louisiana parishes, as listed in the appendix to this
order.
---------------------------------------------------------------------------

(2)(a) The real property involved was directly affected by
the
major disaster; or
(2)(b) The real property involved was not directly affected
by the
major disaster but the transaction would facilitate recovery from the
disaster;
(3) There is a binding commitment to fund a transaction that
is
made within three years after the date the major disaster was declared
by the President; and
(4) The institution retains in its files, for examiner
review,
appropriate documentation indicating that the requirements of Items
(1)-(3) above are met and supporting the valuation of the real property
involved in the transaction.

Appendix

Counties and parishes designated by FEMA as receiving
``Individual and Public Assistance (all categories)'' and
``Individual and Public Assistance (Categories A and B)''